PNB Housing Finance Company Ltd’s (PNBHFL) Board of Directors  on Wednesday evening approved capital raising of upto ₹2,500 crore via rights issue.

The detailed terms in relation to the Rights Issue including the issue price, rights entitlement ratio, record date and timing will be determined in due course, PNBHFL said in a filing in the stock exchanges. On Wednesday, PNBHFL’s stock price had closed 0.6 per cent higher at ₹ 420.35 per share on the Bombay Stock Exchange (BSE).

Met with regulatory hurdle

It maybe recalled that PNBHFL was last year (in  October) compelled to call off its ₹4,000 crore capital-raise plan involving Carlyle Group and other marquee investors. The ₹4,000-crore preferential issue of PNBHFL to private equity major Carlyle and other investors had hit a regulatory hurdle last year on the aspect of pricing of the preferential issue. 

As of end December 31, 2021, Punjab National Bank (PNB) held 32.57 per cent stake in PNBHFL.

‘AA’ rating for PNBHFL’s NCD

Last week, India Ratings had flagged risks from elevated delinquency levels at PNBHFL and noted that it was essential for the housing finance company to raise equity capital to maintain adequate buffers to absorb credit costs. It also affirmed “AA” rating on non convertible debentures issued by the company and maintained a negative outlook. 

PNBHFL’s assets under management (AUM) declined to ₹66,539 crore in December 2021 from a level of ₹74,469 crore in March 2021 and ₹83,346 crore in March 2020.

PNBHFL has been transforming itself into a retail-focussed home loan provider and had taken a call to exit from corporate business. In the last two years, the company had reduced its corporate book by ₹12,000 crore, and this is one of the reasons why its overall assets under management (AUM) had gone down. 

PNBHFL had a capital adequacy ratio of 21.59 per cent and tier-I capital of 18.9 per cent as of end December 2021.

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